The Attorney General’s office in New York has directed Coin Cafe, a cryptocurrency trading platform based in Brooklyn, to reimburse $4.3 million to investors who were deceived. According to the allegations, the company concealed exorbitant fees from its clients, which also resulted in their accounts being completely emptied at certain times.
The investigation’s results showed that Coin Cafe advertised free wallet storage on its website, but it charged hidden fees to its clients. Coin Cafe has consented to reimburse the impacted parties, which consist of 340 investors residing in New York, as a component of its agreement with the state.
Coin Cafe Repayment
Coin Cafe has come to terms with the state of New York to provide compensation to investors. The sum of $508,000 will be distributed among 340 individuals in the state. The company will still be permitted to carry out its operations, but it is required to reimburse all fees to investors based in the U.S. who request a refund within the next 12 months.
Coin Cafe, headquartered in Brooklyn, submitted an application for a virtual currency license with the New York State Department of Financial Services in July 2015. However, the license was only granted in January of this year.
The trading platform successfully ran its business for seven and a half years, even though it underwent an application process. However, authorities have flagged the company as posing a risk to investors as it did not follow the mandatory requirement of registering with the Office of Attorney General for New York.
The Coin Cafe Allegations
On May 18, it came to light that the exchange had been imposing excessive fees for Bitcoin storage without adequately notifying investors. This resulted in instances where investors lost their entire accounts, as per the statement by Letitia James, the Attorney General of New York State.
James has accused Coin Cafe of perpetrating fraud against multiple New Yorkers, resulting in the loss of thousands of dollars. Further, the company has been reported to charge exorbitant fees without adequately disclosing them to investors. For instance, a New York investor incurred fees exceeding $10,000 in one month, while another was charged a total of $51,000 in fees over a period of 13 months.
Letitia James, the Attorney General of New York, has stated that Coin Cafe employed deceptive marketing strategies to cheat many people out of substantial sums of money because of the absence of efficient regulatory protocols. To avoid such fraudulent practices from happening again, it is imperative to establish more robust regulations for the cryptocurrency sector.